Preface

The United States' tariff war has initiated a currency conflict, causing significant fluctuations in the Taiwanese dollar. This leads to critical questions regarding its potential impact on the real estate market. By examining performance trends following the implementation of the house and land tax, it's evident that a stronger Taiwanese dollar primarily affects the stock market. However, the linkage to real estate appears more indirect, manifesting through deferred effects over time.

Lazy bag

A strong Taiwanese dollar boosts stocks significantly while impacting real estate more subtly over time. Recent trends show complex interconnections.

Main Body

According to Hsu Chia-Hsin, the Executive Director of Chinatrust Real Estate Consulting's Planning Research Office, Taiwanese dollar appreciation has had a direct influence on stock market performance over the past years. In contrast, its effect on real estate seems surprisingly muted. Nonetheless, when the stock market is strong, there is often a noticeable knock-on effect on real estate.

Data from the Ministry of Finance and Ministry of the Interior show that after 2021, the Taiwanese dollar weakened, with exchange rates continuing to depreciate. Post-pandemic, the return of Taiwanese businesses bolstered the economy. Coupled with the AI wave driving semiconductor growth, the stock market ascended consistently till 2024, with weighted indexes rising annually except in 2022.

On the real estate front, house prices followed an upward trajectory with a 38.3% increase from 2021 to 2024. This trend suggests robust property value retention within the nation. Transfer statistics, however, showed varied year-to-year performance, peaking in 2021 and 2024 but dipping in 2022 and 2023 due to real estate cooling measures.

Lai Chih-Chang, the PR Director at Comfort Housing Research Office, found that the relationship between the Taiwanese dollar's valuation and the housing market demonstrates a relative correlation. That said, the link isn't straightforwardly positive due to significant stock and currency fluctuations. Investors often benefit from stock market returns before reallocating their assets to property for inflation hedging.

Despite the recent sharp rise in the Taiwanese dollar, Lai warns of potential export challenges and instability in global finance, exacerbated by the U.S. tariff strategies. These factors could dent buyer confidence, indirectly affecting property market momentum.

Hsu additionally highlights that the currency-to-real estate linkage is not very pronounced but carries deferred effects akin to a "domino effect." When the currency is strong and coincides with a rising stock market, it often leads to increased property transactions in successive years, as evidenced in 2018-2019 and 2023-2024. The influence of real estate policies and market highs necessitates further observation for potential benefits, advising purchasers to tread with caution.

Key Insights Table